LBO: Investment Bank Fairness Opinion

Abstract

Leveraged buyouts utilize borrowed money to finance a deal. A leveraged buyout (LBO) occurs when an investor, typically a financial sponsor, acquires a controlling interest in a company's equity and where a significant percentage of the purchase price is financed through leverage (borrowing). The acquired company's assets are the collateral for the borrowed capital. LBOs usually use a combination of debt instruments, typically from banks and debt markets.

A fairness opinion is a professional evaluation by qualified analysts or advisors as to whether the terms of a merger, acquisition, buyback, spin-off, or going private are fair.